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USDA Loans

A USDA loan is a mortgage product backed by the U.S. Department of Agriculture (USDA) and is commonly referred to as a “rural housing” loan. USDA mortgages are designed to encourage homeownership in rural areas of the country by offering certain financial incentives (including the potential of no down payment) to prospective low- and moderate-income purchasers.

Qualifying for a USDA Mortgage Loan

The main requirement for a USDA loan is that the home be located in a designated rural area established by the Department of Agriculture. You can determine if a specific property is located in a designated area under the USDA’s eligibility tool. Also, the home must be the owner’s primary residence.

Lastly, a borrower must meet specific debt-to-income and income restrictions.

Advantages of USDA Loans

100 percent financing available

No penalties for pre-payment

Gift funds are permitted

Sellers are allowed to pay up to 6 percent of closing costs

Disadvantages of USDA Loan

Geographic limitations and income limitations

Private mortgage insurance is required

Not eligible for investment properties

Only primary residence is allowed

Is a USDA Loan Right for You?

USDA mortgage loans are available for low- and moderate-income homebuyers in specified areas with minimum reserve assets.

They could be a good fit if you:

Are looking or are willing to buy in a rural area

Need low up-front costs

Have little saved for a down payment

Don’t qualify for other types of financing

Not sure if a USDA loan is the right loan option for you, then contact Park Cities Mortgage and visit with one of our experienced loan officers. These options require the expertise of loan officers who are familiar with the USDA program.